______________________________________________________ DISMISSED FOR LACK OF JURISDICTION: March 2, 1993 ______________________________________________________ GSBCA 12193-P NATIONAL LOAN SERVICENTER, INC., Protester, v. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Respondent, and COMPUTER DATA SYSTEMS, INC., Intervenor. Ronald K. Henry, John B. Veach III, John B. McDaniel, Jeffrey A. Stonerock, Samuel J. Waldon, and Michael Marinelli of Baker & Botts, Washington, DC, counsel for Protester. John P. Opitz, Michael J. Farley, and Virginia Kelly Stephens, Office of the General Counsel, Department of Housing and Urban Development, Washington, DC, counsel for Respondent. Gerard F. Doyle, Ron R. Hutchinson, and Scott A. Ford of Doyle & Bachman, Washington, DC, special counsel for Respondent. Marcia G. Madsen, Thomas J. O'Brien, D. Brent Israelsen, Cathy Briskie Teleky, Robin R. McCune, and Don R. Blevins of Morgan, Lewis & Bockius, Washington, DC, counsel for Intervenor. Before Board Judges DANIELS (Chairman), HENDLEY, and WILLIAMS. HENDLEY, Board Judge. Respondent has moved to have us dismiss protester's complaint due to lack of subject matter jurisdiction. We grant the motion. Background This protest concerns Request for Proposal No. DU100C000016987 (RFP) that the United States Department of Housing and Urban Development (HUD) issued on September 13, 1991. This procurement is for the services of a "Master Servicer." The Master Servicer would both manage and service loans that were previously made by HUD under Section 312 of the Housing Act of 1964, 42 U.S.C. 1452b (hereinafter Section 312). Solicitation, Section C (Statement of Work), I(C) at 3 (noting that the Master Servicer will be responsible for servicing the Section 312 portfolio and for carrying out all activities necessary to the total operation and management of the portfolio). The solicitation provides that the Master Servicer's responsibilities in servicing and managing the section 312 portfolio will include: (1) servicing of all loans currently assigned to the current Master Servicer, and any loans returned to HUD for direct servicing by the general servicer. (2) servicing of all remaining loans, serviced by the current general servicer at the termination of the general servicer's contract on December 28, 1992. (3) coordinating and undertaking legal/foreclosure services incidental to loans in servicer's portfolio. (4) assist[ing] HUD in carrying out debt collection policies required by OMB and the Treasury Department Financial Management Service (FMS). (5) developing and generating reports needed to manage and maintain the overall loan portfolio and reports related to debt collection policies and accounting operations. (6) conduct[ing] loan accounting activity in accordance with HUD requirements and provid[ing] required accounting reports. (7) coordinating activities with the cash management contractor in the Section 312 cash management system for all loans not fully transferred to the Master Servicer by the initiation of the contract. Id., I(A) at 1. The Section 312 portfolio contains approximately 40,000 loans with a principal balance of nearly $540,000,000. Id., III(C)(1). HUD has recognized that given the large volume of loans contained in the Section 312 portfolio, performing the above functions requires the use of automatic data processing equipment (ADPE). See id.,(IV)(A)(7)(b) at 18. The "equipment" section of the solicitation noted, in very general terms, that a contractor- supplied computer system is necessary for the performance of this contract. Id. This system is required to have high-speed printing capabilities, communication capabilities, and a sufficient number of terminals. Id. No other detail is provided as to the composition of the computer system. See id. The solicitation also required each bid to contain an amount to cover the full cost of providing software on an as-needed basis. Id. at 19. The solicitation further noted that the successful contractor will receive, from the current servicer, the electronic file/account data in a computer readable format. Id. The successful contractor is required to provide one terminal and printer to the Government. Id. at 18-9. Within four months of the contract award, the Master Servicer is also required to establish a management and information system. "This system shall be capable of providing management information on all phases of loan account activity, contract activity, progress on special activities and all other activities. . . . Management reports shall be generated on a monthly basis unless otherwise specified." Id., (B)(2) at 43-44. The volume of reports is such that extensive data processing is necessary. See id. The solicitation only sketched the broad outlines of the computer system and permitted prospective contractors to use whatever ADPE they deemed most appropriate. See Solicitation, id. The evaluation system confirms this conclusion in that it merely asks for a listing of the computer equipment that the contractor possesses or will obtain. Solicitation, Section M (Evaluation), III at 6. By contrast, the solicitation contains extensive criteria for evaluating the efficiency of the prospective contractors in servicing and managing the Section 312 portfolio. Solicitation, Section M. On November 23, 1992, National Loan Servicenter (NLS), an incumbent under one of the current loan servicing contracts, was notified that the contract would be awarded to Computer Data Systems, Inc. (CDSI). Subsequently, NLS filed this protest with this Board. CDSI timely intervened. CDSI and HUD moved to have us dismiss the protest due to lack of subject-matter jurisdiction. Discussion Respondent and intervenor advance two distinct theories as to why we lack jurisdiction. The first theory is that we do not have a procurement in front of us, but instead a designation of an agent pursuant to a statutory grant of power to create an agency relationship. Hence, they assert that under United States v. Citizens & Southern National Bank, 889 F.2d 1067 (Fed. Cir. 1989), we lack jurisdiction over the protest. The second theory is that, even if there is a procurement before us, it is not a procurement for ADPE. Thus, under the Brooks Act, 40 U.S.C. 759(f)(1) (1988), we lack jurisdiction over this protest. We address each theory in turn. I. Agency Theory A. Whether Section 312 Establishes an Agency Relationship 1. Comparison of Section 312 and the Citizens & Southern Statutes In Citizens & Southern, the United States Court of Appeals for the Federal Circuit held that the Department of Treasury's Financial Management Service's "designation of banks as depositaries and financial agents pursuant to sections 90 and 265 of the National Bank Act does not constitute a 'procurement' of property and services within the meaning of the Federal Property and Administrative Services Act of 1949, 40 U.S.C. 471-544 (1982), as amended by the Brooks Act, 40 U.S.C. 759 (1982 & Supp. V 1987)." 889 F.2d at 1069 (emphasis added). Hence, the Court held that this Board lacked jurisdiction to entertain the protest because the selection by Treasury was conducted under statutory authority to designate an agent rather than as a procurement under the Brooks Act. In the case before us respondent and intervenor contend that Section 312 grants HUD authority to designate agents in a manner analogous to the Treasury Department's authority in Citizens & Southern. Respondent and intervenor thus assert that because HUD has powers similar to those of the Treasury in Citizens & Southern, HUD's actions do not "constitute a 'procurement' of property and services. . . ." Id. Hence, they argue that this Board lacks jurisdiction over NLS' protest. We agree with respondent and intervenor that the statutes are similar in effect. Section 312 provides that: [t]he Secretary is authorized to delegate to or use as his agent any federal or local public or private agency or organization to the extent he determines appropriate and desirable to carry out the objectives of this section in the area involved . . . . Former 42 U.S.C. 1452b(f) (1988) (emphasis added). The relevant statutory sections from Citizens & Southern, 889 F.2d at 1069, provides that: All national banking associations, designated for that purpose by the Secretary of the Treasury, shall be depositaries of public money . . .; and they may also be employed as financial agents of the Government; and they shall perform all such reasonable duties, as depositaries of public money and financial agents of the Government, as may be required of them. 12 U.S.C. 90 (1988) (emphasis added); and, All insured banks designated for that purpose by the Secretary of the Treasury shall be depositaries of public money . . . and they may also be employed as financial agents of the Government; and they shall perform all such reasonable duties, as depositaries of public money and financial agents of the Government as may be required of them. 12 U.S.C. 265 (1988) (emphasis added). As is evident from the quoted language, all three statutes allow the specified Government agencies to create an agency relationship with a private party. Furthermore, Section 312 is substantially broader than the statutes in Citizens & Southern. Section 312 is the only statute to expressly delegate to the Secretary the power to dictate the terms of the agency as he sees fit, whereas the Citizens & Southern statutes themselves establish the terms of the agency relationships created under them. Compare former 42 U.S.C. 1452b(f) with 12 U.S.C. 90 and 12 U.S.C. 265 (noting that sections 90 and 265 use the mandatory term "shall" when describing the duties of the agent and limit the agent's performance to "reasonable duties," whereas Section 312 places complete discretion in the Secretary of HUD to determine the duties of the agent). 2. Section 312 and the Citizens & Southern statutes are equivalent a. Unique Relationship Protester argues that these statutes are not equivalents. Protester contends that Citizens & Southern was premised on "the unique and longstanding relationship between the Department of Treasury and the Nation's banks," and that there is no such relationship in the present protest. Protester's Reply to the "New Argument" by Intervenor Regarding Jurisdiction at 3. While recognizing that in Citizens & Southern there was a unique relationship, nonetheless it cannot be gainsaid that the plain language of Section 312 provides HUD with similar, and broader powers than those of the Treasury in Citizens & Southern. Compare former 42 U.S.C. 1452b(f) with 12 U.S.C. 90 and 12 U.S.C. 265. Moreover, Citizens & Southern clearly affirmed that Congress can sanction an agency relationship between a Governmental body and a private entity. 889 F.2d at 1069. b. Financial Agent Protester also argues that Citizens & Southern is inapplicable to the case before us because the Citizens & Southern statutes contained the phrase "financial agent," whereas Section 312 contains only the bare word "agent." We consider this to be a distinction without a difference. The responsibilities of a Section 312 agent are exactly the same, if not broader, than those of a Citizens & Southern financial agent. Compare former 42 U.S.C. 1452b(f) with 12 U.S.C. 90 and 12 U.S.C. 265. Moreover, it is apparent that the Court was focusing on the establishment of the agency relationship as opposed to the phrase "financial agent." Citizens & Southern, 889 F.2d at 1070 (emphasizing that a conferral of a status is not a procurement contract). The Court declared that this Board has jurisdiction over agency procurements only when an agency "is acting as a commercial purchaser of goods and services," and not when it is designating a financial agent, i.e. conferring a status upon a private entity. Id. at 1069. We see no difference between that situation and the set of circumstances that is anticipated by Section 312. Section 312 clearly contemplates an establishment of an agency relationship. Former 42 U.S.C. 1452b(f). When HUD designates an agent under Section 312 it establishes an agency relationship, i.e. it confers a status upon the private entity. Inasmuch as Section 312 has essentially the same effect, i.e. providing for the creation of an agency relationship, as did statutes discussed in Citizens & Southern, and since Citizens & Southern commands us not to treat the designation of an agent under such statutes as a procurement, protests concerning a designation of an agent under Section 312 are not within our jurisdiction. B. Section 312 is Applicable to the Master Servicer Program Finally, protester argues that Section 312 is inapplicable to the case before us. 1. Section 312 has not been repealed in its entirety Protester contends that HUD's authority to appoint agents pursuant to Section 312, has been repealed. This argument is premised on the language of 42 U.S.C.A. 12839(b) (West Supp. 1990). Section 12839 provides: (a) In General -- Except with respect to projects and programs for which binding commitments have been entered into prior to October 1, 1991, no new grants or loans shall be made after October 1, 1991, under -- . . . . (2) Section 312 of the Housing Act of 1964; . . . . (b) Repeals -- (1) Except as provided in paragraph (2), effective on October 1, 1991, the provisions of law referred to in subsection (a) are repealed. (2) No effect on SRO program. . . . (c) Disposition of Repayments -- Any amounts received on or after October 1, 1991 as repayments or recaptures in connection with the programs referred to in subsection (a) and any other amounts for such programs that remain or become unobligated on or after such date, shall be paid into the general fund of the Treasury. We recognize that section 12839 is not a model of clarity. A cursory reading of this section could lead one to conclude that subsection (b) contradicts subsection (a). When subsection (b) repeals all the provisions of law referred to in subsection (a) it apparently makes no exception for the agents needed to manage and service the pre-October 1991 loans which subsection (a) apparently expressly exempted. We are required to "interpret statutes as a whole, giving effect to each word and making every effort not to interpret a provision in a manner that renders other provisions of the same statute inconsistent, meaningless, or superfluous." Boise Cascade Corp. v. United States Environmental Protection Agency, 942 F.2d 1427 (9th Cir. 1991). Consequently, reading the provisions together as a logical unit, we hold that Section 12839(b)'s incorporation of subsection (a) includes the exception clearly stated in subsection (a). Thus, HUD's authority to service loans that were entered into under Section 312 prior to October 1, 1991, survived repeal. Implicit in this authority is HUD's ability to continue to appoint agents to manage and service the surviving remnants of Section 312's loan portfolio, which is exactly what HUD is doing. 2. Funding has been maintained for Section 312 Bolstering our conclusion is the fact that funding is still maintained for Section 312. Under this procurement the Master Servicer is to be paid out of the HUD revolving fund (liquidating program), as evinced by Section II A(5) of the solicitation. This revolving fund is the funding source for the servicing of residual obligations associated with a substantial number of programs. See 12 U.S.C. 1701g-5 (1988). The revolving fund is made applicable to Section 312 by 12 U.S.C. 1701g-5c (1991),[foot #] 1 and is available "for all necessary expenses (including administrative expenses) in connection with the liquidation of the programs carried out pursuant to the foregoing provisions of law." 12 U.S.C. 1701g-5. The ----------- FOOTNOTE BEGINS --------- [foot #] 1 Section 1701g-5c directs all "the assets and liabilities of the revolving fund established by [Section 312], and any collections, including repayments or recaptured amounts, of such fund . . ." into the Revolving Fund (liquidating programs), established pursuant to title II of the Independent Offices Appropriation Act 1955, as amended, 12 U.S.C. 1701g-5. ----------- FOOTNOTE ENDS ----------- revolving fund provision, 12 U.S.C. 1701g-5, by its reference to "programs carried out pursuant to the foregoing provisions of law," covers the loan servicing procedures of Section 312. Id. Ergo, the liquidation must be carried out as provided for in Section 312. Funding was thus preserved for the servicing of remaining loans under the Section 312 program. Since Congress would not preserve funding for a nonexistent program, it is obvious that it was Congress' intention to allow the servicing of the remaining loans under Section 312. Therefore, Section 12839 should not be interpreted to have repealed Section 312 in its entirety, but rather to have preserved the respondent's ability to service existing loans under Section 312. 3. HUD used Section 312 as the authority for the Master Servicer Program Protester has further argued that even if HUD could have used Section 312, HUD did not actually use it. We however find that HUD used Section 312 as the source of its authority for its designation of an agent as a Master Servicer. We reach this conclusion because the Master Servicer will in fact be an agent, and no other authority for such an appointment is apparent. a. The Master Servicer is an agent Protester points out that HUD has consistently represented the solicitation as being a procurement for services, rather than a "designation of an agent," and treated it as such, e.g. using Federal Acquisition Regulation (FAR) clauses in the solicitation. However, this does not detract from the fact that HUD is appointing an agent. In Citizens & Southern the court held that Treasury was designating an agent even though Treasury had issued a solicitation that was "modeled on the Federal Acquisition Regulation (FAR)". 889 F.2d at 1068-69. Hence, even though Treasury used the FAR and represented that it was conducting a procurement, the Court held that Treasury's representations did not change the character of Treasury's conduct, namely designation of an agent. See id. The court's holding is rooted in agency law. The fact that both principal and agent deny the existence of the relationship is not conclusive proof of the lack of an agency. Centennial Leasing, GSBCA 11389, slip op. at 3-4 (Dec. 1, 1992) ("[i]mplied authority is actual authority [to act as an agent] circumstantially proved, resting ultimately upon the principal's intention and manifested by the facts"); Savoy Construction Co., ENG BCA 4104, 83-2 BCA 16,655, at 82,817-8 ("[a]n agency may be implied from words and conduct of the parties and circumstances of the particular case evidencing an intention to create the relationship"). An agency relationship can come into being based merely upon the conduct of the relevant parties. Centennial Leasing, slip op. at 4. In the case before us, the Master Servicer will perform HUD's remaining tasks under Section 312. Solicitation Section C (Statement of Work), II at 5 (noting that the Master Servicer "will ultimately manage the entire Section 312 national loan portfolio").[foot #] 2 In addition, the solicitation provides that the Master Servicer will be paid out of funds that are specifically allocated to "fully fund all necessary aspects of the loan servicing operation associated with the continued maintenance of the Section 312 portfolio and its associated costs." Id., III(A)(5) at 7. Hence, we have before us a very broad delegation of powers by HUD under a solicitation that contemplates using the Section 312 statutory scheme. Furthermore, Section 312 authorizes the Secretary to delegate "to or use as his agent any federal or local, public or private, agency or organization to the extent he determines appropriate and desirable to carry out the objectives of this section in the area involved. . . ." Former 42 U.S.C. 1452b(f) (emphasis added). No other part of Section 312 discusses how HUD is to manage the loans. See former 42 U.S.C. 1452b. HUD's only alternative to appointing an agent under Section 312 is to manage the loans itself. It has obviously chosen not to do so. Given HUD's intention to operate within the statutory scheme of Section 312, and its desire to delegate the broad responsibility associated with managing the Section 312 portfolio to an organization outside of HUD, it is clear that it was HUD's intention to appoint an agent under Section 312. Therefore, it is of no consequence that HUD couched this "designation of an agent," in terms usually associated with a procurement, and utilized FAR clauses in the solicitation because, as previously noted, it is not the terms it used that are important, but rather its intentions as expressed by its conduct that dictate whether or not we have an agency. Citizens & Southern, 889 F.2d at 1068- 69; Centennial Leasing, slip op. at 3-4. b. Section 312 is the only available statute capable of supporting the Master Servicer Program. We are supported in our conclusion that it was HUD's intention to appoint an agent under Section 312 by the fact that the parties have pointed to no other plausible statutory source of authority to support HUD's continued management of the Section 312 loan portfolio. ----------- FOOTNOTE BEGINS --------- [foot #] 2 Particularly, the solicitation notes that the Master Servicer will not only be responsible for the establishment and the collection, of mortgage debt accounts, and to some degree, the undertaking or coordination of legal actions associated with the debts, but shall also have responsibility for carrying out activities necessary to the total operation and management of the portfolio. Id. I(C) at 3. ___ ----------- FOOTNOTE ENDS ----------- Protester's contention that HUD utilized the Debt Collection Act, 31 U.S.C. 3718(a), and the Federal Claims Collection Standards, 4 CFR 101-105, as its source of authority for the retaining of a private entity as a Master Servicer, is not credible. (1) The Federal Claims Collection Standards are not the source of Authority for the Master Servicer Program Protester is correct in noting that the solicitation does mention the Federal Claims Collection Standards, 4 CFR 101-105. Protester is also correct in noting that these standards contain authorization for HUD to "contract for collection services to recover delinquent debts . . . ," 4 CFR 102.6, and to "enter into a contract or contracts for collection services to recover indebtedness owed the department." 24 CFR 17.77. However, the solicitation merely indicates that the Master Servicer, in performing its servicing duties, must to "the maximum extent possible," conform its servicing policies to the Federal Claims Collection Standards, 4 CFR 101-105, and the Office of Management and Budget's Circular A-129. Solicitation, Section C (Statement of Work), IV(B)(1)(a), at 23. HUD is merely stating its intent that HUD's agent, appointed under Section 312, conform its collection and servicing policies to the Federal Claims Collection Standards. See id. HUD at no time indicated that it was exercising its authority to appoint an agent under these provisions. See id. We are bolstered in our belief that it was not HUD's intention to exercise its authority to enter into contracts under the Federal Claims Collection Standards, by the fact that these standards are briefly mentioned in a single sentence in the heart of the solicitation, in a section that is entitled "Tasks". Id. ("[t]o the maximum extent possible the collection and servicing policies shall be consistent with the Federal Claims Collection Standards and the Office of Management and Budget's Circular A- 129" (citations omitted)). The solicitation makes no other mention of these standards. See Solicitation, Section C (Statement of Work). On the other hand, the solicitation prominently makes numerous references to Section 312 at the very beginning of the solicitation. E.g. id., I(A) (describing the designated agent as a Section 312 Master Servicer), I(C) (indicating that the Master Servicer will service all Section 312 loans and that legal services will be performed in conformity with HUD's Office of General Counsel's interpretations of Section 312), III(A) (describing the background of the Section 312 program and future funding of the Section 312 program). Perhaps the single most telling piece of evidence concerning HUD's intentions is the fact that the very first paragraph of the solicitation's statement of work describes the agent, to be designated by HUD, as a Section 312 Master Servicer who will service the Section 312 loan portfolio. Id. I(A). It seems highly unlikely that HUD would make continuous and prominent references to Section 312 and at the same time bury the referral to the Federal Claims Collection Standards in the "Tasks" section of the solicitation if protester's contention was correct. Rather, HUD's intention to exercise its authority under the remaining living parts of Section 312 is clear. We thus conclude that the Federal Claims Collection Standards, 4 CFR 101-105, were not the source of authority used by HUD for the Master Servicer appointment, because the law did not require HUD to exercise that authority and it was not HUD's intention, as plainly expressed in the solicitation, to use the Standards. (2) The Debt Collection Act is not the source of authority for the Master Servicer Program Protester is correct in noting that the Debt Collection Act, 31 U.S.C. 3718(a), provides that heads of federal agencies may contract with a private entity for collection services. However, this does not change our conclusion that HUD utilized Section 312 to appoint a Master Servicer. Protester must obviously recognize the discretionary nature of Section 3718(a). Section 3718(a) states that [u]nder conditions the head of a [federal agency] considers appropriate, the head of the agency may make a contract with a person for collection services to recover indebtedness owed the United States Government. Id. (emphasis added). Obviously, Section 3718(a) does not require HUD to contract for collection services. Rather the language appears to require an affirmative expression of intent, by HUD, to use its authority, before HUD may create contracts under Section 3718(a). Protester has not pointed to any mention of the Debt Collection Act within the solicitation. Moreover, as we have already noted, there are numerous references to Section 312 in the solicitation. Hence, we cannot conclude that it was HUD's intention to authorize a contract under the Debt Collection Act. Rather, it is plain that HUD intended to utilize Section 312. Furthermore, intervenor is correct in noting that contracts under the Debt Collection Act are "effective only to the extent and in the amount provided in an appropriation law." 31 U.S.C. 3718(e). Protester has not pointed to any such appropriation. In addition, while the Debt Collection Act states that a contract may provide that the servicer is to be paid out of the amount recovered, id. 3718(d), the Master Servicer contract does not contain such a provision. As already noted, the Master Servicer will be paid out of the HUD Revolving Fund (liquidated program). Solicitation, Section C (Statement of Work), III(A)(5). Payment from this fund occurs in accordance with Section 312, not the Debt Collection Act. Hence, the Master Servicer Program lacks the requisite funding provisions for it to have been authorized under the Debt Collection Act. Consequently, we conclude that HUD did not use the Debt Collection Act, as its source of authority for the Master Servicer appointment, because the law did not require HUD to exercise this authority and it was not HUD's intention, as plainly expressed in the solicitation, to use it. (3) The Debt Collection Act and the Federal Claims Collection Standards are not broad enough to authorize the Master Servicer Program In further support of our conclusion that HUD did not utilize the Debt Collection Act and the Federal Claims Collection Standards as its source of authority for retaining a Master Servicer, we note that their provisions are not broad enough to cover the entire delegation of powers to the Master Servicer. Protester has argued that the Master Servicer Program is not unique; that "[s]ervicing of [the Section 312 portfolio] is no different from the servicing of other portfolios with funds from the Revolving Fund (liquidating programs). . . ." Protester's Supplemental Memorandum in Support of Jurisdiction at 9. We believe that the protester has misconstrued the nature of the Master Servicer Program. The solicitation makes specific reference to the unique nature of the Master Servicer Program. Solicitation, Section C (Statement of Work), I(C) at 2. The solicitation notes that the Master Servicer is intended to convey a concept that "goes beyond the routine and accepted definition of 'loan servicer.'" Id. Specifically, the solicitation states that: [a] loan servicer is traditionally involved with the establishment of, and the collection of mortgage debt accounts, and to some degree, undertakes or coordinates legal actions associated with the debts. Under the [Master Servicer] concept, the [Master] Servicer shall not only be responsible for traditional services, but it shall have the added responsibility for carrying out activities necessary to the total operation and management of the portfolio (except for the exercise of discretionary Governmental authority which must be reserved for HUD staff). Id., I(C) at 3. Hence, the Master Servicer, as envisioned by HUD, is fundamentally different from traditional servicers. None of the provisions cited by protester make reference to the Master Servicer's unique powers. See 31 U.S.C. 3718(a) (stating only that the Government "may make a contract with a person for collection services to recover indebtedness owed the United States Government"); 4 CFR 102.6 (stating only that agencies "have the authority to contract for collection services to recover delinquent debts . . ."); 24 CFR 17.77 (stating only that the "Secretary may enter into a contract or contracts for collection services to recover indebtedness owed the Department"). Rather, the authorizations to contract with private entities for collection services under the Federal Claims Collection Standards, 4 CFR 101-105, and the Debt Collection Act, 31 U.S.C. 3718, only contemplate the traditional servicer. In fact, of the sections that have been cited to us by the parties, only Section 312 grants HUD sufficient authority to make the broad delegation of powers contemplated by the Master Servicer RFP.[foot #] 3 Consequently, only Section 312 could have been used by HUD as the authority for the delegations to the Master Servicer in the solicitation. Therefore, given HUD's intention to use Section 312, to appoint an agent to act as a Master Servicer for the Section 312 portfolio, and the fact that no other provision of law has been presented to us that could support HUD's expressed desire in the solicitation, protester's contention that HUD did not use Section 312 is mistaken. C. Agency Theory Conclusion Accordingly, we dismiss this protest for lack of subject matter jurisdiction because, under Section 312, HUD had the authority to appoint an agent to act as a Master Servicer for the Section 312 portfolio and, in fact, utilized this power. Citizens & Southern, 889 F.2d at 1070 (the conferral of agent status upon an agent does not constitute a procurement contract upon which this Board can assume jurisdiction). II. ADPE Theory The second theory presented by respondent and intervenor as to why we lack subject matter jurisdiction over this protest is that even if the solicitation is a procurement, it is not a procurement for ADPE[foot #] 4 and, thus, is not covered by the Brooks Act, 40 U.S.C. 759 (1988). A. The Brooks Act ----------- FOOTNOTE BEGINS --------- [foot #] 3 Specifically, Section 312 states that: [t]he Secretary [of HUD] is authorized to delegate to or use as his agent any Federal or local public or private agency or organization to the extent he determines appropriate and desirable to carry out the objectives of this section in the area involved . . . . Former 42 U.S.C. 1452b(f) (1988). [foot #] 4 Although, in the first section of this decision, we concluded that the designation of a Master Servicer is not a procurement, for argument's sake, and for lack of a ___ better term, in section two, actions leading to the designation may at times be addressed by this Board as a "procurement." ----------- FOOTNOTE ENDS ----------- The Brooks Act authorizes this Board to accept jurisdiction of, and decide cases concerning, the purchase, lease, and maintenance of ADPE. 40 U.S.C. 759(f)(1). The Act defines ADPE as: any equipment or interconnected system or subsystems of equipment that is used in the automatic acquisition, storage, manipulation, management, movement, control, display, switching[,] interchange, transmission or reception, of data or information - (i) by a Federal agency, or (ii) under a contract with a Federal agency which - (I) requires the use of such equipment, or (II) requires the performance of a service or the furnishing of a product which is performed or produced making significant use of such equipment. . . . . (3) This section does not apply to - (A) automatic data processing equipment acquired by a Federal contractor which is incidental to the performance of a Federal contract. 40 U.S.C. 759(a)(2), (3) (emphasis added). Thus, we lack jurisdiction of a protest if a federal contractor's ADPE usage is not significant or is incidental to the contractor's performance of the contract. Id. B. FIRMR Bulletin A-1 The Federal Information Resources Management Regulation (FIRMR) is promulgated by the General Services Administration to implement the Brooks Act. FIRMR Bulletin A-1 declares that federal agencies need to use a series of 'tests' to determine FIRMR applicability to a solicitation or contract involving FIP[[foot #] 5] resources. . . . When none of ----------- FOOTNOTE BEGINS --------- [foot #] 5 The FIRMR refers to ADPE as "federal information processing" (FIP) resources. The FIRMR definition of FIP, 41 CFR 201-4.001 (1992), is equivalent to the definition of ADPE in the Brooks Act, 40 U.S.C. 759(a)(2) (1988); see also ___ ____ CSC Credit Services, Inc. v. Department of Veterans Affairs, ----------- FOOTNOTE BEGINS --------- GSBCA 11414-C(11350-P), 92-2 BCA 24,778, at 123,619 n.3, 1992 BPD 47, at 8 n.3 (noting that FIP and ADPE are equivalents). ----------- FOOTNOTE ENDS ----------- the exceptions[[foot #] 6] to FIRMR applicability are relevant, there are six questions that must be answered to determine whether the FIRMR applies to an agency solicitation or contract. Those questions are: (1) Does the solicitation or contract require de- livery of FIP resources for use by a Federal agency. . . ? (i) If the question is answered "yes," the FIRMR applies to the solicitation or contract. It should be noted that "significant use" and "incidental to the performance" are not a consideration when the solicitation or contract requires the delivery of FIP resources for use by a Federal agency or its designated users. (ii) If the question is answered "no," additional questions must be considered to determine whether the FIRMR applies to the agency solicitation or contract. (2) Does a principal task of the solicitation or contract depend directly on the use of FIP resources? (i) If the question is answered "no," the FIRMR would not apply to the solicitation or contract. (ii) If the question is answered "yes," additional questions must be considered to determine whether the FIRMR applies to the agency solicitation or contract. (3) Do the requirements of the solicitation or contract have the effect of substantially restricting the contractor's discretion in the acquisition and management of the FIP resources? (i) If the question is answered "no," the FIRMR would not apply to the solicitation or contract. (ii) If the question is answered "yes," additional questions must be considered to determine whether the FIRMR applies to the agency solicitation or contract. ----------- FOOTNOTE BEGINS --------- [foot #] 6 The "exceptions" that the FIRMR is referring to here are those for radar, sonar, radio, and television equipment. See FIRMR Bulletin A-1(6)(a)(1). These exceptions are irrelevant ___ to the question at hand. ----------- FOOTNOTE ENDS ----------- (4) Does the solicitation or contract explicitly require the use by the contractor of FIP resources? (i) If the question is answered "yes," the FIRMR applies to the solicitation or contract. (ii) If the question is answered "no," additional questions must be considered to determine whether the FIRMR applies to the agency solicitation or contract. (5) Could the service or product required by the solicitation or contract reasonably be performed or produced without the use of FIP resources? (i) If the answer is "yes," the FIRMR does not apply to the solicitation or contract. (ii) If the answer is "no," one additional question must be applied to determine FIRMR applicability to the agency solicitation or contract. (6) Would the dollar value of FIP resources expended by the contractor to perform the service or furnish the product be expected to exceed the lower of $500,000 or 20 percent of the estimated cost of the contract? (i) If the answer is "no," the FIRMR does not apply to the solicitation or contract. (ii) If the answer is "yes," the FIRMR is applicable to the FIP resources portion of the solicitation or contract. FIRMR Bulletin A-1 at 3-5 (emphasis added).[foot #] 7 We have previously used these questions to guide us in our determination of whether or not a protest involves ADPE. CSC Credit Services, Inc. v. Department of Veterans Affairs, GSBCA 11414-C(11350-P), 92-2 BCA 24,778, 1992 BPD 47. We recognize GSA's wide discretion in implementing its statutory obligation to regulate the acquisition of ADPE by the Federal Government. Cf. Immigration Naturalization Service v. Cardoza Fonseca, 480 U.S. 421, 448 (1987) (noting that where a statute contains gaps "'left, implicitly or explicitly, by Congress,' the courts must respect the interpretation of the agency to which Congress has ----------- FOOTNOTE BEGINS --------- [foot #] 7 Questions 2 and 3 are primarily concerned with whether the ADPE resources are incidental to contract performance, while questions 5 and 6 are primarily concerned with whether the contract makes significant use of ADPE resources. See FIRMR Bulletin A-1, attachment D. ___ ----------- FOOTNOTE ENDS ----------- delegated the responsibility for administering the statutory program"). Hence, we give proper consideration to each of these questions, as necessary, in our determination of whether or not the Master Servicer Program is an ADPE procurement. 1. Question One The first question asks whether the solicitation requires delivery of FIP resources for use by a Federal agency. FIRMR Bulletin A-1, at 3. If the answer to question one is "yes" then by the express terms of the FIRMR, the procurement is an ADPE procurement and we must accept jurisdiction. Id. This question specifically notes that "'significant use'" and 'incidental to the performance' are not a consideration" in this inquiry. Id. (emphasis added). The protester has pointed out that the solicitation expressly requires the Master Servicer to have a computer system that is "capable of providing loan account information to the [Government Technical Representative] through a contractor provided computer terminal and high-speed printer." Solicitation, Section C (Statement of Work), IV(A)(7)(b) (emphasis added). Therefore, read literally, question one would have to be answered with a "yes." Nonetheless, we will not literally follow this part of the Bulletin because it would lead to ludicrous results. By its very terms, question one could result in the absurd situation of the subject of a multi-million dollar contract being characterized as ADPE simply because a single computer terminal is to be loaned to the Government for its use. As the present case shows, almost all large dollar contracts frequently involve the transfer of some ADPE. Such a de minimis transfer of ADPE was never intended by Congress to create an ADPE contract. 40 U.S.C. 759(a)(2)(A)(ii)(II). In the present case, despite Bulletin A-1, we could not conclude that this multi-million dollar contract is an ADPE contract simply because the solicitation requires the contractor to provide a single computer terminal and high-speed printer for the Government's use. Solicitation, Statement of Work, IV.A.(7)(b). We will not hold that question one has been validly answered "yes" merely because one terminal will be loaned to the respondent. 2. Question Two As we answer "no" to the first question, we proceed to the second question. This question asks whether a principal task of the solicitation or contract depends directly on the use of FIP resources. On all large Government contracts the answer to this question would frequently be "yes," because in our modern world all large and many small contracts "depend directly on the use of FIP resources." FIRMR Bulletin A-1 at 3; see Citizens & Southern, 889 F.2d at 1069 (noting that modern commercial banks must employ ADPE to be of value to the Government). This is clearly evident in the case before us. Despite respondent and intervenor's half-hearted denials, no one can seriously doubt that this contract, with its high volume of data processing, could be performed competently without the use of ADPE. We thus proceed to question three. 3. Question Three Question three asks whether the requirements of the solicitation have the effect of substantially restricting the contractor's discretion in the acquisition and management of FIP resources. If this question is answered "no," then the FIRMR dictates that the contractor's ADPE usage is incidental to the procurement. FIRMR Bulletin A-1, Attachment D. We have previously analyzed question three. Childress & Associates v. ACTION, GSBCA 11768-P, 92-2 BCA 24,997, 1992 BPD 103. In Childress, protester contended that the solicitation restricts the contractor's discretion by requiring that data be provided on media that are 'MS-DOS formatted' and do not include high-density disks, and that text files be in 'either WordPerfect 5.1, WordPerfect 5.0, or ASCII files.' Id. at 124,590, 1992 BPD 103, at 5. In response, we stated that "[t]he fact that a report must be supplied in computer- readable form does not make the procurement one for ADPE." Id. We further noted that at best these restrictions were minimal and could not bring the procurement under the Brooks Act. Id. Hence, it was our holding that we lacked jurisdiction over that procurement because the contractor's discretion in the acquisition and management of ADPE resources was not substantially restricted. Therefore, ADPE usage was incidental to the main contract. Id. In the controversy before us, the Master Servicer Program does not even impose the minimal restrictions on the contractor's discretion that were noted in Childress. Although protester has pointed to several paragraphs of the solicitation that it alleges "severely restricts the contractor's discretion as to the acquisition and management of FIP resources," Protester's Memorandum in Opposition of Motions to Dismiss For Lack of Jurisdiction at 7, we disagree with protester's characterizations. Nowhere in the solicitation are there any restrictions of the order of magnitude necessary to trigger a "yes" response to question three. The protester contends that the successful contractor will have his discretion in the acquisition and management of FIP resources severely restricted because the solicitation states that: [t]he current Master Servicer maintains its own software system. This system utilized COBOL computer language and runs on an IBM 3081 mainframe computer (MVS/SP Operating System). The system data files are sorted using IBM's Virtual System Access Method (VSAM). The successful bidder, other than the current servicer, would receive electronic file/account data generated in a format compatible with the above described IBM system. Solicitation, Section C (Statement of Work), IV(A)(7(b) (emphasis added). This paragraph simply acknowledges that the successful contractor will receive data in a computer format. Id. This cannot be considered a restriction because the solicitation simply does not require the successful contractor to maintain these files in any particular or special computer format. See id.; Childress & Associates, 92-2 BCA at 124,590, 1992 BPD 103, at 5. (a contractor's discretion is not sufficiently constrained so as to trigger this Board's jurisdiction when the specifications are so broad as to give the contractor a wide choice of alternatives). The nature of this procurement is such that there is an implicit assumption that the contractor will maintain these files as computer documents, but this is clearly nothing more than an obvious recognition of a necessary understanding between the contractor and the Government that ADPE will be used. Such an understanding merely reflects the fact that the Government recognizes that ADPE is ubiquitous, and that all large Government contracts usually depend upon it regardless of whether it is mentioned in the contract itself. See Citizens & Southern, 889 F.2d at 1069. An understanding of this nature does not amount to the type of restriction on the contractor's discretion in acquisition and management of ADPE that would trigger our jurisdiction. See id. (recognizing that ADPE is implicitly present in all large Government contracts, and asserting that this understanding by itself is not enough to establish this Board's jurisdiction). Even if we agreed that the solicitation explicitly required the maintaining of the data in a computer-readable form, we would not accept jurisdiction. As Childress & Associates, 92-2 BCA at 124,590, 1992 BPD 103, at 5, explained, we are not concerned with broad, general restrictions that leave the contractor a wide choice of alternatives. A restriction that is so broad that it leaves a contractor with a wide choice of alternatives is by its very nature an insubstantial restriction. See id. Hence, the mere fact that a report must be supplied, or in this case maintained, in computer-readable form does not make the procurement one for ADPE. Id. The other paragraphs relied upon by protester to demonstrate that the successful contractor will have his discretion restricted are even less convincing. Protester points to the fact that the solicitation states that the system "must" have high-speed printing capabilities, "sufficient" number of terminals, communications capability to transmit or receive data from the general servicer and the lockbox contractor, and a capability of providing loan amount information to the Government Technical Representative (GTR). Solicitation, Section C (Statement of Work), IV(A)(7)(b) at 18-19. The protester points, in particular, to what it perceives is the "smoking gun" of this case: the fact that the solicitation states that "[t]he principal item of equipment necessary to the performance of the contract is a computer system with appropriate peripherals capable of automation of the current and anticipated loan portfolio accounts, the management tracking system, and all required and special reports." Id. Additionally, we note that the solicitation also requires that each bid contain an amount sufficient "to cover the full cost of providing software on an as-needed basis. . . ." Id. at 19. None of these alleged restrictions are substantial enough to support our jurisdiction. The facts of this case are similar to example two in FIRMR Bulletin A-1, Attachment C.[foot #] 8 In that example, GSA explained that the FIRMR would not apply to a solicitation requiring completion of a study of an agency's organization and personnel distribution, even though the solicitation specifically required the vendor to develop software, gather information, use a computer to process the information, and produce the report. Id. In CSC Credit, 92-2 BCA at 123,619, 1992 BPD 47, at 9, we explicitly approved of GSA's analysis in example two. Specifically, we approved of the notion that this Board cannot accept jurisdiction over any protest where a solicitation only "generally" requires the development of software and use of a computer without otherwise restricting a contractor's acquisition or management of ADPE resources. Id. In the case before us, only the most general of constraints, such as requiring the Master Servicer to provide funds for future software needs and requiring the computer system to have printing and communication capabilities and sufficient terminals, were stated in the solicitation. Solicitation, Section C (Statement of Work), IV(A)(7)(b) at 18-19. HUD never sought to flesh out any of these requirements; rather, it is apparent from the solicitation that those submitting proposals were free, and even encouraged, to use whatever ADPE would allow them to perform the desired services most efficiently. See id., IV(A)(7)(b). Hence, the language ----------- FOOTNOTE BEGINS --------- [foot #] 8 Example two is one of a group of examples that is provided in the Bulletin to demonstrate how the FIRMR jurisdictional questions should be applied. We have previously found these examples to be beneficial in helping us decide jurisdictional issues under the FIRMR questions. Childress & ____________ Associates, 92-2 BCA at 124,590, 1992 BPD 103, at 5 (discussing __________ examples two and three); CSC Credit, 92-2 BCA at 123,619, 1992 ___________ BPD 47, at 9 (discussing examples two and three). ----------- FOOTNOTE ENDS ----------- quoted by the protester, i.e. that the contract requires funds for prospective software and a computer system which is capable of automation of the current and anticipated loan portfolio accounts, the management tracking system, and all required and special reports, and which has high-speed printing capabilities, a "sufficient" number of terminals, communications capability to transmit or receive data from the general servicer and the lockbox contractor, and a capability of providing loan amount information to the GTR, is not a restriction on the contractor's acquisition or management of ADPE resources, because the solicitation has largely left to the Master Servicer the discretion to determine the means of providing the services. It is true that HUD has stated that the principal item necessary to perform this contract is a computer. However, in light of the fact that HUD encouraged the prospective contractors to use any ADPE which the contractors perceived as most efficient, HUD's pronouncement can only be viewed as a simple acknowledgement of the fact that in a contract of this nature and magnitude a computer is a necessary piece of equipment. See Citizens & Southern, 889 F.2d at 1069 (noting that modern commercial banks must employ ADPE to be of value to the Government). Therefore, as we have found only general requirements or restrictions in the solicitation that do not substantially restrict the Master Servicer's discretion in the acquisition or management of ADPE resources, we must answer question three with a "no." A "no" answer to this question indicates that the ADPE resources under this procurement are incidental to the performance of the contract. FIRMR Bulletin A-1 (7)(e)(3)(i), at 4. Thus, we do not accept jurisdiction over this protest because any ADPE that is required by the solicitation is merely incidental to the performance of the contract. C. Under Board case law the Master Servicer Program is not ADPE We note that even if we were not bound to the FIRMR, we would still hold that we could not accept jurisdiction over this protest because, under the circumstances of this case, any use of ADPE resources by the Master Servicer, is incidental to the contract. In Childress & Associates, 92-2 BCA at 124,589, 1992 BPD 103, at 4, this Board held that a procurement was not an ADPE procurement simply because the contractor used a Government or privately owned data base. See also CSC Credit, 92-2 BCA at 123,618, 1992 BPD 47, at 7 (noting that ADPE is not a significant part of a procurement if a contractor is only adding to or improving the management of a database). We also held in Childress that a procurement for a non-ADPE product or service, which is created through the use of professional services, is not an ADPE procurement, even though ADPE is used to create the product or perform the service. Childress & Associates, 92-2 BCA at 124,589, 1992 BPD 103, at 4; see also Norwood and Williamson, Inc., GSBCA 10717-P, 90-3 BCA 23,265, at 116,714, 1990 BPD 217 at 11 (a procurement for professional drafting, site verification, and drawings, is not subject to the Brooks Act even though the professionals must use ADPE to generate the drawings and must deliver the drawings in diskette form). The reasoning of Childress is supported by our appellate court in Citizens & Southern. There the Court explicitly recognized that a procurement for professional services is not an ADPE procurement simply because the contractor must use ADPE to be of value to the Government. See 889 F.2d at 1069. When we apply these edicts to the Master Servicer Program, it is apparent that the Master Servicer Program is not an ADPE procurement. The purpose of this procurement is to obtain the services of a Master Servicer who will both service and manage the Section 312 portfolio. Solicitation, Section C (Statement of Work), at 3 (noting that the Master Servicer will be responsible for servicing the Section 312 portfolio and, for carrying out all activities necessary to the total operation and management of the portfolio). These services are not ADPE services, but loan services. See id. Moreover, the staffing provisions of the solicitation confirm the fact that the purpose of this procurement is loan management and servicing and not ADPE. While the solicitation explicitly requires that special attention be given to the hiring of qualified accounting and legal staff, and staff experienced in multifamily servicing/workouts, it never mentions the need to hire staff skilled in ADPE or that ADPE expertise is a necessary prerequisite to hiring. Id. IV(A)(8), at 18. The Master Servicer Program is analogous to a procurement for legal services. Today, most attorneys rely heavily on computers to perform their traditional legal duties. This Board itself extensively uses a VAX system to provide wordprocessing and management of our caseload. No one can seriously contend that this Board and attorneys similarly situated are performing ADPE services; the ADPE is obviously incidental to our legal duties. The same holds true for the Master Servicer Program. It is no more a procurement of ADPE services than is our hypothetical procurement of lawyer services. Hence, we will not accept jurisdiction of this protest. Even assuming a procurement exists, it is not an ADPE procurement. Any use of ADPE by the Master Servicer is incidental to the central purpose of the contract, and we lack jurisdiction under the Brooks Act. 40 U.S.C. 759. Decision The protest is DISMISSED FOR LACK OF JURISDICTION. The suspension of respondent's delegation of procurement authority lapses by its own terms. _____________________________ JAMES W. HENDLEY Board Judge I concur: _____________________________ MARY ELLEN COSTER WILLIAMS Board Judge DANIELS, Board Judge (Chairman), concurring. The opinion of the Board as to the agency nature of the relationship between HUD and CDSI is faithful to the direction given by the Court of Appeals for the Federal Circuit in United States v. Citizens & Southern National Bank, 889 F.2d 1067 (Fed. Cir. 1989). That decision has been criticized as faulty in both analysis and conclusion. According to a distinguished commentator, the Court did not properly focus on the nature of the transaction in question (development of a new computer system) or the procedure the agency went through to enter into the relationship with the private party (a procurement). 6 Nash & Cibinic Report 78-79 (May 1992). Nevertheless, Citizens & Southern is the law and we must follow it. The language of the statute involved in this case is strikingly similar to the statutes the Court interpreted in that one; the Court's analysis compels the same result. I therefore concur in part I of the opinion. Having found that HUD's designation of CDSI as its agent exempts this case from our protest jurisdiction, we need go no further. I view the analysis of whether the Government is acquiring automatic data processing equipment as dicta because it is unnecessary to the result. I do not associate myself with it. _________________________ STEPHEN M. DANIELS Board Judge